Question

The government decides to increase its spending by $6 billion. Over time the real GDP increased by $9 billion. The expenditure multiplier is ________ 1.5. Group of answer choices higher than two times lower than equal to

Answer 1

Answer:

c. Equals to 1.5

Explanation:

Options are "a. -lower than  b. -higher than  c. -equal to "

Expenditure multiplier = Change in real GDP / Change in spending

Expenditure multiplier = 9/6

Expenditure multiplier = 1.5

Thus, the expenditure multiplier is equal to 1.5